Question

Authorised capital of ₹ 16,00,000 of Soumya Ltd. is divided into 1,60,000 Equity Shares of ₹ 10 each. Out of these shares, 80,000 Equity Shares were issued at par to public for subscription. The issue price is payable on application. All the shares were subscribed.

Pass necessary Journal entries in the books of the company.

Answer 1

Journal Entries in the Books of Soumya Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		8,00,000
	To Shares Application A/c			8,00,000
	(Application money received on 80,000 Equity Shares @ ₹ 10 per share)
2.	Shares Application A/c   ...Dr.		8,00,000
	To Share Capital A/c			8,00,000
	(Application money transferred to Share Capital on allotment of 80,000 Equity Shares)

Working note:

Shares issued = 80,000

Face value per share = ₹ 10

Since shares were issued at par and the entire issue price was payable on application:

80,000 × ₹ 10 = ₹ 8,00,000

Therefore, application money received and transferred to Share Capital = ₹ 8,00,000.